Abercrombie & Fitch: A Real And Distressed Valuation

Areeb Haq profile picture
Areeb Haq


  • The retail industry is not as bleak as it is portrayed.
  • The company is repositioning itself by focusing on online sales and closing retail stores.
  • With $548 million in cash, Abercrombie & Fitch can support the impressive 6.58% dividend yield.
  • At a low price of $9.59/share, the stock presents a significant potential upside.

After dropping 21.13% to a price of $9.59/share on Monday, Abercrombie & Fitch Co. (NYSE:ANF) is effectively selling on a bargain. With ANF's market cap falling 75% in less than 10 years and the stock at its lowest level since May 2000, many investors are reluctant to go near the company. Another brutal day in the market for ANF gives rise to a cliche question - How low can ANF go?

With the retail industry, in general, experiencing an impending disaster, ANF's competitors including Aeropostale, Wet Seal, and BCBG Max Azria Group have filed for bankruptcy over the past two years. However, the retail industry's outlook is not as bad as it is portrayed by the mainstream media. The retail sales grew by 4.1% over Q1 2016 and 0.3% in Q4 2016. In addition, the notion that retailers are closing stores amid changing consumer preference is nothing more than a hasty generalization. According to Greg Buzek, 19 retailers plan to open 2861 stores by the end of this year. Moreover, the retailers entering bankruptcy protection in 2017 were already on the brink of collapse before January 1st. The retail market is essentially an environment with intense competition which ensures the survival of the fittest. This is ultimately good for the industry itself.

The stalled talks between ANF and potential buyers indicate that the board has faith in its repositioning strategies. On Monday the ANF said, the best way to create value for its shareholders is “the rigorous execution of our business plan". ANF stressed that it will focus on its bright spot of growth, Hollister. The brand has a good reputation among its intended target customers which is reaffirmed by its growing sales. Hollister, alone, had sales of $1.8 billion last year which made up half of ANF's revenue. The

This article was written by

Areeb Haq profile picture
I am currently a senior pursuing an undergraduate degree in Finance and Investments. I have been researching and analyzing stocks for academic and professional purposes for the past seven years. I specialize in mid-small cap stocks with a primary focus on dividend and growth. My goals for writing articles on Seeking Alpha are to bring awareness and exposure to small-cap stocks which are often neglected by the mainstream investor.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Recommended For You

Comments (2)

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.